On 25th November the Chancellor, George Osborne unveiled his Spending Review and Autumn Statement but what does the latest announcement mean for you?
The autumn statement sees no further changes to the income tax rates that were previously announced in the summer budget. It was anticipated that there may be further changes to the taxation of dividends, but these remain unchanged at the April 2016 rate whereby you won’t be charged tax of the first £5,000 of your dividend income.
The current tax-free savings threshold for ISAs will also be kept at its current level (£15,240).
In an unexpected U-turn The Chancellor has announced that the planned £4.4bn cuts to tax credits (benefit payments for individuals on low incomes) announced in the summer budget would be scrapped.
The state pension for existing pensioners will rise by 2.9 per cent (£3.35 a week) from April to match the rise in average earnings.
The new tax year will also be a significant one for new retirees as next April will also see the start of a new “flat-rate” state pension which will be set at £155 a week.
In the Summer 2015 budget it was announced that three million new apprenticeships will be created by 2020, funded by a levy applied to large employees.
The apprenticeship levy will come into effect in April 2017 and will be charged at a rate of 0.5 per cent of an employer’s pay bill. The levy will only be paid on employers pay bills over £3million. Less than 2 per cent of UK employers will be eligible to pay the levy.
Councils will be given more power over decision making in their local area and will be able to add 2 per cent to the previously frozen council tax rates to pay towards social care.
From 2020 Councils will also be able to keep money from business rates collected from shops and businesses, to spend on local services.
Buy-to-let landlords and individuals buying second homes seem to be the most affected by the autumn budget. In plans unveiled yesterday both groups will soon be subject to a 3 per cent surcharge on each stamp duty band. This means that for properties worth between £125,000 and £250,000, where stamp duty is set at 2 per cent, buy-to-let landlords will pay 5 per cent from April 2016. This new charge is expected to raise an extra £1bn for the Treasury by 2021.
Capital Gains Tax
It was also announced that from 2019 Capital Gains Tax (CGT) will need to be paid within 30 days of selling a residential property as opposed to at the end of the current tax year as currently stands.
Help to Buy Scheme
There was however good news for first time buyers in London as it was announced that the Help to Buy equity loan scheme will be doubled, rising to 40 per cent from the current 20 per cent.
In a boost for SMEs, the Chancellor confirmed that the small business rate relief scheme would be extended for a further year. It is expected around 600,000 businesses will benefit.
The Chancellor also announced plans to abolish uniform business rates granting new rate-setting powers to local Councils. Further details will be unveiled in the Spring 2016 statement.
Simplifying self assessment
The Government has pledged £1.3bn to transform HMRC into ‘one of the most digitally advanced tax administrations in the world’. By the end of the current parliament in 2020 everyone in the UK will have digital tax accounts in a move that will see a saving of £1.9billion in administration costs.
Draft legislation will be published in the Finance Bill 2016 unveiling a new, simpler process for paying tax.
If you have any questions, or want to discuss in more detail the changes the Autumn Statement may have on you and/or your business, please get in touch!